Railways loss blamed on wages, deregulation

Press, 12 September 1986, Page 1

Railways loss blamed on wages, deregulation

By

OLIVER RIDDELL

in Wellington The Railways Corporation showed a loss of $44.77 million during 1985-86, after its loss of $19.97 million the previous year. It was a difficult and testing period, said the corporation’s executive chairman, Mr Ross Sayers. Many employees had done their best but the losses incurred in the second half of the year had exceeded anyone’s expectations, with the

early real effects of the new competition resulting from deregulation beginning to be felt seriously, Mr Sayers said. At the same time wages had been substantially greater than the corporation had budgeted for, and a substantial part of costs were related directly to wages. “These trends underlie the fragility of our short-term and long-term position,” Mr Sayers said. The Minister of Railways, Mr Prebble, said

increasingly intense road competition after the 1983 deregulation of road transport had had a serious effect on Railfreight business. The financial results reflected these circumstances, but big changes were being planned to improve productivity. These included alternative manning of freight trains, consolidation of freight terminals and workshops, and streamlining of procedures, he said.. Such measures would

return profitability in the medium term but involved significant costs, and corporation losses this year would be even greater. Mr Sayers said the “sad fact” was that corporate facilities were now badly out of balance with the diminished market resulting from road transport deregulation. He warned that the Railways Corporation in 1986-87 faced the likelihood of losses double those of 1985-86.